Religiosity and threshold effect in social and financial performance of microfinance institutions

Mohammad Ashraful Mobin

Akhuwat Interest Free Microfinance

A Journey of Hope

Junaid Farid
Director, Strategic Planning & International Marketing

Akhuwat

An attempt to resolve poverty and social

development issues through innovation

History
Akhuwat was established in 2001 with the objective of
providing interest free micro-credit to the poor so as to
start a business, come out of poverty and enhance their
standard of living. Subsequently it added education, health,
clothing and some other services in its mandate

Akhuwat
advantaged.

means solidarity with the poor and less

Akhuwat
Vision
A poverty free society built on the principles of compassion
and equity.

Mission
To alleviate poverty by
empowering socially and
economically marginalized families through interest free
microfinance, quality education, better health-harnessing
entrepreneurial potential and building capacity by
imparting knowledge, skills and social guidance.

Objectives
To provide interest free microfinance services to poor
families enabling them to become self-reliant
To promote interest-free loans (Qarz-e-Hasna) as a
viable model and a broad-based solution for poverty
alleviation
To provide social guidance, capacity building and
entrepreneurial training

Objectives
To institutionalize the spirit of brotherhood,
compassion, and volunteerism
To transform Akhuwat borrowers into donors
To make Akhuwat a sustainable, growth-oriented
and replicable organization

Core Principles
Interest-free loans Qard e Hasan
Use of Religious places like mosque & church
Spirit of Volunteerism
Transforming Borrowers into Donors

Products
Enterprise Loan
Liberations Loan
Agricultural Loan
Education Loan
Marriage Loan
Emergency Loan
Housing Loan
Establishment of School Loan

Range of Loans

Usage of Loan

Map of Pakistan

Cost structure of Loans

Loan Structure
Interest on Loan
= 0
Loan Processing fee = 0
Profit on Loan
= 0
Application Fee
= $2
Insurance
= 1%

Performance Overview
Started in 2001 with 100 USD
Credit pool has now grown to USD 90 Million
The credit pool is a revolving fund
The amount is regularly disbursed and
recovered
Cumulative disbursement is USD 300 Million

Performance Overview
Total Benefiting Families = 1.6 Million
Total Amount Disbursed = USD 300 Million
Active Loans
= 600,000+
Number of branches
= 508
Number of cities & towns =
300
Number of staff
= 3000+
Recovery Rate

= 99.8%

Progress Overview

Progress Overview
No of Loans
600000

500000

496458

400000
367798
300000
234883
200000
159138
100000
67683
192
0

282

832

3124

6264

8674

11388

13821

21073

34194

Progress Overview
GROW TH
No. of Branches

No. of Staff

3500

2964

3000

2500
2007

2000
1600
1500

1000

858

508

505

500

358
1

2001-2002

2002-2003

12

2003-2004

32

2004-2005

11 50
2005-2006

18

75

2006-2007

20

76

2007-2008

22

90

2008-2009

181
36
2009-2010

77
2010-2011

153
2011-2012

254

2012-2013

289

2013-2014

356

2014-2015

2015-2016

Progress Overview
% of Cost per Loan
20

18.3

18

15.49

16
13.36

14
12
10.34
10
8
6
4
2
0

9.54
6.41

6.8

6.38

7.61

12.82

13.25

15.11

14.2

12.68
9.79

Progress Overview

Repeat Loan Analysis

Replication

How to replicate
Introduction of Akhuwat model
Website and promotional material
Training manuals and operational material
Staff training
Visit Akhuwat premises
Continuous technical support

Issues in Replication
Strong Commitment
Financial Resources
Operating at optimum level
Simplicity and keeping costs low
Local conditions
Human Resource

Akhuwat Projects
Akhuwat Institute of Social Enterprise & Management
Akhuwat University
Akhuwat College
Akhuwat Schools
Akhuwat Health Services
Akhuwat Cloth Bank
Akhuwat Make a Dream
Khwajasira Rehabilitation Program

OUR BELEIEF
Poverty alleviation is the joint responsibility of the
state and the civil society
Equitable distribution of wealth is a pre-requisite
Charity alone is not the answer
Solidarity with the poor is the way forward
Availability of credit/financial inclusion is a must for all
We derive our inspiration from Islam but our message is

Discussion

Question and Answer Session

AlHuda CIBE FZ LLE - U.A.E

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